Scott Millard, the CEO of Paterson’s Habitat for Humanity, is in the business of providing homes for people of modest means.
But these days, he’s seeing a lot more people who can’t afford entry-level homes. Many of them are working people who don’t qualify for affordable-housing programs. Often they are millenials boxed out of New Jersey’s pandemic real estate market, which inflated home prices and rents.
“Some people say [millennials] don’t want to be homeowners, it’s the new rental generation,” said Millard, “But there’s other thought out there that says it has very little to do with them not wanting to be homeowners — there are no entry-level homes anymore.”
While this trend is not new, “It’s hitting a crisis point,” said Millard.
Since the pandemic began, New Jersey has steadily grown less affordable for its residents.
According to a 2021 report jointly released by the National Low Income Housing Coalition and Housing and Community Development Network of New Jersey, it became the sixth-most expensive U.S. state to rent in, up from its seventh-place ranking in 2020. In Morris, Essex and Sussex counties, renting a two-bedroom apartment will run you more than $1,600 a month. It’s over $1,700 in Bergen and Passaic counties.
At those rates, someone would have to make around $31 an hour to sustain their rental housing. But of the 30 most common New Jersey jobs, the report found that 20 of them— including teacher assistants, nursing assistants, and janitors — pay below that wage. If you’re working a minimum wage job in New Jersey, you would have to work 107 hours a week to keep up with rent in those areas.
The story doesn’t look much better for buyers. “Average for-sale home prices have climbed by over $80,000 in recent months,” said Melanie R. Walter, executive director of the New Jersey Housing and Mortgage Finance Agency.
On Zillow.com, real estate agents have listed as of Sept. 10 just 37 single-family homes under $350,000 in Bergen County — and among those are many that are tear-downs or need extensive renovations. Some are short sales, a type of distressed sale that involves lots of red tape and money upfront.
A $350,000 home in livable shape, if such a home could be found, would cost around $2,100 a month in mortgage payments and property taxes.
What about affordable housing?
To qualify for subsidized affordable housing in New Jersey, you must earn at or below 80% of the area median income (AMI). For a family of four living in Bergen, Passaic, Essex, Morris, Sussex, Union or Warren County, that’s an income of $78,500.
But families in New Jersey who make above that income limit struggle to compete in the non-subsidized housing market
These households usually fall between 80% and 120% AMI. And as the housing market heated up over the past year, more current and prospective New Jersey residents got burned, finding their financial capabilities no longer as competitive as they once were.
Consumer Credit and Budget Counseling is an agency providing housing guidance for families and individuals in need of credit and finance assistance. After April 2020, the agency saw a rise in first-time homebuyers, usually in the 80 to 120% AMI range, looking to invest in a home.
“Those buyers were being forced out of the market,” said Executive Director Russell Graves. These buyers might be families who had been living in a high-density apartment, but are now looking for more space.
But other home seekers at this income level are often millennials with student loan debt looking for a starter home. According to Graves, when it comes to starter homes, “There are none available. The ones that are available need lots of tender, love, and care” —often costy and too much to take on.
Crisis point for housing
The pandemic shares in the blame for how we got to this crisis point.
The pandemic brought on a confluence of low interest rates and the desire for suburban homes from residents of jam-packed cities, which spiked the demand for New Jersey homes.
At the same time, many suburban homeowners were not looking for a mid-pandemic residence change and stayed put. Short supply and increased demand meant that prices shot up.
However, even as sellers have begun to come back to the market recently, Graves does not foresee the demand lightening up. “That’s not enough houses for the demand out there,” he said, “So you’re going to see continued upward pressure on prices.”
As thousands of condominiums and apartments are built across North Jersey, they are nearly all billed as luxury units, boasting rooftop lounges and expensive amenities, with just a fraction set aside for people who qualify for affordable housing.
That puts the squeeze on people in the middle.
“Ultimately, these trends have serious implications – not just for housing affordability, but for the affordability of maintaining and improving quality of life,” said Walter of the New Jersey Housing and Mortgage Finance Industry.
Original Article Appeared at : Source
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